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I was recently in a jewellery store when a customer walked in, selected a number of valuable pieces, took wads of cash from his briefcase, paid for his purchases and walked out. A friend of mine working in a similarly upmarket estate agency tells me that high-end properties are often purchased for cash. Isn’t this suspicious? Is there no regulation that governs transactions of this kind? — Vigilant
Dear Vigilant,
What you describe are transactions that should be reported to the Financial Intelligence Centre. The centre is a government agency in the National Treasury established under the Financial Intelligence Centre Act 2001. It collects and analyses information to fight the global crimes of money laundering and terrorism.
Your friend the estate agent is required to report cash transactions under the act. Estate agents, as well as various other “accountable or reporting institutions” listed in the act — banks, car dealers, casinos and attorneys — must report any transaction of R25,000 or more that is made in cash.
The report must be filed as soon as possible, but no later than two days after the person has become aware of the large cash transaction. Failing to do so is a criminal offence punishable by imprisonment for up to 15 years or a fine not exceeding R10-million.
As for the purchase at the jewellery store, although shop owners do not have an immediate obligation to report cash transactions, the act does require all persons who own, manage or are employed by a business to report suspicious and unusual transactions (section 29).
This would include the sort of purchase you describe. The jewellery store representative must report the transaction if they suspect they have received the proceeds of unlawful activities, or property connected to money laundering or the financing of terrorist activities.
It is important to make it clear that no monetary threshold applies to the reporting of suspicious or unusual transactions. In this case, too, the report must be filed on the Financial Intelligence Centre’s website as soon as possible within 15 working days. No duty of secrecy or confidentiality can prevent any institution or person from complying with an obligation to file a report.
Failing to report a suspicious and unusual transaction is punishable by imprisonment (up to 15 years) or a fine (up to R10-million). However, employees have a defence if they reported their suspicion to a superior or the person designated in the business to make reports to the centre.
If a business reports a suspicious transaction, it may benefit from the transaction unless the centre directs otherwise. The act also protects people who make reports to the centre. No legal action, whether criminal or civil, can be instituted against anyone who complies in good faith with the reporting obligations of the act.
For more information, visit the Financial Intelligence Centre’s website at fic.gov.za.
Corruption Watch will be participating in a global campaign to be launched by Transparency International later this year. This “no impunity’” campaign is aimed at exposing the proceeds of corruption and so easing the task of punishing perpetrators.
An important element of the campaign will be directed at ensuring more robust regulation of the sellers of luxury assets such as real estate, jewellery, art, cars, yachts and private jets.
• This article was first published in Sunday Times: Business Times
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